You won’t be able to redeem mutual funds online without it now

If you are a mutual fund investor who uses online platforms to conduct financial transactions such as redemptions, investing through a Systematic Transfer Plan (STP), making transfer requests, etc., then from the June 1, you will only be able to make such transactions if they are validated via two-factor authentication (2FA). This means that a one-time password (OTP) will be sent to the registered investor’s mobile number/email ID and an investor will be required to enter this OTP online before the trade is processed.

Mutual fund companies are sending reminder emails to investors asking them to update their mobile number/email ids in folios so they can continue to make redemptions, switches, etc.

According to the email communication sent by the Franklin Templeton Mutual Fund to its investors:
In order to ensure safe online transactions for all your investments with Franklin Templeton, we will soon require the entry of an additional one-time password (OTP) for the following online transactions:

  • Redemption
  • To change
  • Registration of Systematic Transfer Plan (STP)
  • Enrollment in the Systematic Withdrawal Plan (SRP)

This additional OTP will be sent to the contact details (mobile number and/or e-mail id) registered in the respective customer file with us. This initiative is in line with the recent SEBI circular on two-factor authentication, effective June 1, 2022.

Similarly, sent an e-mail communication to its customers:
Securities and Exchange Board of India (SEBI) has ordered mutual fund distributors to have 2-factor authentication (2FA) for all redemptions and transfers from June 1, 2022. This 2-factor authentication must be performed on the updated mobile number in the mutual fund folio. To honor redemptions and exchanges, please update the same updated mobile number in the bank account associated with the folio. We would send the OTP for the 2FA to the updated mobile number in the bank records. In case of mismatch between the mobile numbers on which the OTP is sent and the AMC records, the transaction will be rejected. For any questions or assistance, you can contact our customer service department on 1860 120 7777. The above can be ignored if the updated mobile number in the bank and mutual fund folio is the same.

Ashwin Karmarkar, Partner, Vintage – a Mutual Fund Distributor says: “As per Sebi guidelines, mutual fund investors, those who regularly use the online platform to redeem their investment or switch to different mutual funds etc. must have their mobile number/email ID registered in their investments, as their transaction will be authenticated via an OTP sent to their registered mobile number and email address. If OTP verification is not performed, the transaction will not be processed.”

How to Update Mobile Number in Mutual Fund Investments

Others like

Mutual Fund, Mirae Asset Mutual Fund, etc. also sent similar emails to investors informing them of 2FA on online redemption, exchange, STP and SWP registration transactions. The OTP will be sent to the customer’s registered mobile number and email address.

An investor whose mobile number is not registered in their mutual fund investments can do the same through these channels:

  • Submit a physical request to the fund house: A person can submit a request to each mutual fund company where they hold investments. The mutual fund company will update the cell phone number on file. Once updated, the investor will be able to trade online.
  • Updating mobile number in KYC records: If an investor updates their mobile number in the KYC records, then wherever their mutual fund investments are, they will update the mobile number. However, note that this is a long and time-consuming process compared to submitting the application directly to the mutual fund company.
  • Submit the request to CAMS: A person can also submit a mobile number update request online through CAMs. Here is the link to do the same:

CAMS is the Registrar and Transfer Agent (RTA) for mutual fund companies that handles investor records on behalf of mutual fund companies. A person will need to mention their PAN number and correct/update mobile number to bring it up to date. Note that this online process will require investors to attach proof of KYC verification.


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